Photo Credit: Adam Procter
A case in the news shows the importance of having an IP policy in place at your startup that explains to your employees that the company owns what’s invented at work…
A former University of Missouri professor is on trial for his plans to sell an innovative process for making antifreeze by his own company. The school claims they own the intellectual property rights to the anti-freeze process and sued.
The university brought an action against Galen Suppes over a failed effort to market a form of propylene glycol made from soy diesel byproducts. The university alleges that Suppes refused to recognize the university’s rights to the invention and sought to market it under his startup.
Professor Said to Wreck Deal with Chemical Company
Three years before the university filed the lawsuit in 2009, Suppes is said to have tried to thwart an exclusive deal with the company Senergy Chemical to market the product used in automobile antifreeze, airplane de-icing, and as a preservative in soft drinks.
However, Suppes argued that it was incompetence at the university that caused the deal to break down. An agreement for the rights to the process could be worth close to $4 million.
Suppes’ defense rested last week without calling the former professor to testify.
Last Tuesday, the attorney for the university put Mike Nichols on the stand as his final witness. Nichols is the former university vice president for research and economic development. Nichols testified about emails with Senergy where Suppes said he was talking to its competitors about a deal, which placed millions of dollars already invested by the company at risk.
University Owns Inventions Created by Its Employees
The University of Missouri’s rules specifically state that any inventions created by full-time employees while on duty or while working in university labs become the intellectual property of the university. Further, when a manufacturer wants to market a product owned by the university, the standard agreement provides the inventor with a one-third share of the university’s royalties. The remaining two-thirds is divided equally between the inventor’s department, the campus, and the system.
Suppes was hired by the University of Missouri in 2001 as a tenured faculty member of the College of Engineering. However, he was fired for behavior that included intimidating and harassing students, fellow faculty, and department chairs; neglect of his duties; and intentional violation of university rules. Suppes recently lost a lawsuit challenging the university’s rules for removing tenured faculty. That ruling was upheld this summer by the state court of appeals, but is now under appeal to the Missouri Supreme Court.
As part of the evidence in the current trial, the university showed more than 30 occasions from 2001 to 2008 in which Suppes changed invention disclosure forms to leave out key elements assigning property rights to the university—this included four involving patents for propylene glycol. Suppes’ legal team has sought to show that he had ownership rights that predated his employment at the university.
The University of Missouri announced the deal with Senergy in 2006 and commended Suppes and his startup, Renewable Alternatives, for their work in developing the process to turn glycerin, a byproduct of biodiesel production, into propylene glycol.
The U.S. Patent and Trademark Office found one key patent to be abandoned during 2007 and 2008, which created uncertainty in the ownership and marketing of the new product.
The case is expected to go to the jury this week.
One of the most valuable things you can do to ensure the success of your startup is to protect your products and services from others who may try to profit from your work and ideas. Employees must understand that your company owns the work they produce for your startup. Meet with an experienced IP attorney and get the resources you need to guarantee all aspects of your IP will remain your own.
Attorney Michael Ahmadshahi, PhD, focuses on patents, intellectual property, copyright, and trade secrets in Irvine, California. The Ahmadshahi Law Offices are also located in Beverly Hills and Sherman Oaks. Call us toll free at (800) 747-6081 or direct at (949) 260-4997 or email [email protected] and let us help you with your intellectual property questions and the IP strategy for your startup.